City Council votes to eliminate 'head tax'

The City Council today voted to eliminate the much-maligned "tax on jobs" by mid-2014, in keeping with a campaign promise by Mayor Rahm Emanuel.

The so-called head tax, paid by the city's larger companies, will be cut in half to $2-per-employee each month on July 1. It will be wiped out two years later.

"I want to applaud the mayor and my colleagues for this," said Ald. Thomas Tunney, 44th, a restaurant owner who has campaign for the tax's repeal since 1995, before he was elected to the City Council. "I am tired of talking about it."

Ald. Brendan Reilly, 42nd, who has worked alongside Tunney in recent years to get rid of the tax, said, "I want to applaud Mayor Emanuel in making this a priority in taking the leash off businesses in Chicago who create jobs and bring investment to our city."

Unaddressed today by either Tunney or Reilly, however, were concerns they expressed a day earlier about Emanuel administration efforts to go back and collect the tax from company owners who say they never knew the owed it.

Under the head tax, companies with 50 or more employees earning at least $4,300 every three months pay a $4-a-month tax for each employee.

Owners of multiple companies that considered together meet that 50-worker threshold also must pay the tax. The city is go after some owners it says meet that standard, but did not pay the head tax, to pay back-taxes and penalties.

The tax brings in about $23 million a year. The full effect of that lost revenue won't be felt by the city until 2015, Budget Director Alexandra Holt said.

"The head tax is a job killer,” Emanuel said in a statement after the vote. “Eliminating the head tax is the right thing to do for businesses big and small, and it’s the right thing to do to secure Chicago’s future.”